Macedonia, or the Republic of Macedonia, officially recognised by the UN and most countries as the Former Yugoslav Republic of Macedonia (FYROM) is a Balkan inland country located in southeastern Europe. The official name of this country is still not recognised due to the name conflict of the word Macedonia, used to describe the ancient Greek territories of Macedonia and the prefecture of Macedonia of modern Greece.

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Name

The name Macedonia is a Greek word originating from the adjective Makednos, meaning big. Ancient Macedonians were of Greek origin and spoke Greek, in contrast to today's residents of FYROM who speak a slavic-bulgarian idiom (slavic majority) and albanian (albanian minority) and do not have a direct tie-in to ancient Macedonia.

Geography

Macedonia is located in the heart of south central Europe. It shares a border with Greece to the south, Bulgaria to the east, Serbia (and Kosovo) to the north, and Albania to the west. The country is 80% mountainous, rising to its highest point at Mt. Korab (peak 2,764 m).

People

Since the end of the Second World War, Macedonia's population has grown steadily, with the greatest increases occurring in the ethnic Albanian community. From 1953 through the time of the latest official census in 2002 (initial official results were released December 2003), the percentage of ethnic Albanians living in Macedonia rose threefold. The western part of the country, where most ethnic Albanians live, is the most heavily populated, with approximately 40% of the total population. As in many countries, people have moved into the cities in search of employment. Macedonia has also experienced sustained high rates of permanent or seasonal emigration.

Government and Political Conditions

The unicameral assembly (Sobranie) consists of 120 seats. Members are elected by popular vote from party lists, based on the percentage parties gain of the overall vote in each of six election districts of 20 seats each. Members of parliament have a 4-year mandate.

The Prime Minister is the head of government and is selected by the party or coalition that gains a majority of seats in parliament. The Prime Minister and other ministers must not be members of parliament.

The President represents Macedonia at home and abroad. He is the commander in chief of the armed forces of Macedonia and heads its Security Council. The President is elected by general, direct ballot and has a term of 5 years, with the right to one re-election.

General parliamentary elections were last held on July 5, 2006. Presidential elections were held April 14 and 28, 2004 to succeed President Trajkovski, who died in office in February 2004. Local elections on the basis of a new municipal division mandated by the Framework Agreement were held in March-April 2005.

The court system consists of a Supreme Court, Constitutional Court, and local and appeals courts. The State Judicial Council governs the ethical conduct of judges and recommends to parliament the election of judges. The Supreme Court is the highest court in the country and is responsible for the equal administration of laws by all courts. Its judges are appointed by parliament without time limit. The Constitutional Court is responsible for the protection of constitutional and legal rights and for resolving conflicts of power between the three branches of government. Its 9 judges are appointed by parliament with a mandate of 9 years, without the possibility of re-election. An independent Public Prosecutor is appointed by parliament with a 6-year mandate.

Principal Government Officials

President--Gjorge Ivanov

Prime Minister--Nikola Gruevski

Deputy Prime Minister (EU Integration)--Gabriela Konevska-Trajkovska

Deputy Prime Minister (Economic Affairs)--Zoran Stavreski

Deputy Prime Minister (Framework Agreement Implementation)--Imer Aliu

Deputy Prime Minister (Agriculture and Education)--Zivko Jankulovski

Foreign Minister--Antonio Milososki

Defense Minister--Lazar Elenovski

Economy Minister--Vera Rafajlovska

Finance Minister--Trajko Slaveski

Interior Minister--Gordana Jankulovska

Justice Minister--Mihajlo Manevski

Appointed Ambassador to the United States--Zoran Jolevski

Ambassador to the United Nations--Igor Dzundev

Foreign Relations

Macedonia's flag from 1991-1995 erupted a furor in neighboring Greece, which insisted that it was an illegal use of Greek images, specifically the Larnax "Vergina sun" symbol of King Phillip II, the father of Alexander the Great

In February 1994, Greece imposed a trade embargo on Macedonia due to disputes over the use of the name "Macedonia" and other issues. Greece and Macedonia signed an interim accord in October 1995 ending the embargo and opening the way to diplomatic recognition and increased trade. After signing the agreement with Greece, Macedonia joined the Council of Europe, the Organization for Security and Cooperation in Europe (OSCE), and NATO's Partnership for Peace (PfP). Athens and Skopje began talks on the name issue in New York under UN auspices in December 1995, opening liaison offices in respective capitals January 1996. These talks continue.

The stability of the young state was gravely tested during the 1999 Kosovo crisis, when Macedonia temporarily hosted about 360,000 refugees from the violence and ethnic cleansing in Kosovo. The refugee influx put significant stress on Macedonia's weak social infrastructure. With the help of NATO and the international community, Macedonia ultimately was able to accommodate the influx. Following the resolution of the conflict, the overwhelming majority of refugees returned to Kosovo. A small number of Roma refugees from Kosovo remains in Macedonia, most of them housed in the predominantly Roma municipality of Suto Orizari in the Skopje suburbs, and supported by the UNHCR.

Macedonia enjoys good relations with its neighbors. It has strong trade and tourism ties with Greece, and has developed similarly robust political and trade ties with Albania and Bulgaria. Relations between Belgrade and Skopje are good overall, although a dispute between the Macedonian Orthodox Church and the Serbian Orthodox Church has strained ties over the past two years. Relations with Kosovo are good, with Macedonia having signed an Interim Free Trade Agreement with UNMIK in 2005 and with regular bilateral political contacts occurring between Pristina and Skopje since 2005.

Macedonia also has made important strides toward Euro-Atlantic integration. Macedonia is an active participant in NATO's Partnership for Peace and Membership Action Plan, the OSCE, and United Nations, and was accepted as a member of the World Trade Organization (WTO) in October 2002. In May 2003, Macedonia, Albania, Croatia, and the U.S. created the Adriatic Charter, modeled on the Baltic Charter, as a mechanism for promoting regional cooperation to advance each country's NATO candidacy. Since then, the Adriatic Charter countries have cooperated closely in regional military exercises, and have deployed a joint medical team to support international coalition operations in Afghanistan. In 1999, the EU agreed to pursue a Stabilization and Association Agreement (SAA) with Macedonia; negotiations with Macedonia were launched April 5, 2000. The SAA was signed April 2001 and came into force in April 2004. Its trade and trade-related provisions have been in force since June 2001. For Macedonia to successfully integrate within the global arena, continued efforts to strengthen its multi-ethnic civil society institutions, to develop measures to promote economic growth and investment, and to foster strong indigenous non-governmental organizations are necessary. On November 9, 2005 the European Commission recommended EU candidate status for the country. It recommended beginning formal accession negotiations after Macedonia had made further progress on a number of reform fronts, including combating corruption; enacting judicial, administrative, and economic reforms; and conducting free and fair parliamentary elections, in accordance with European standards, in 2006. In December 2005, the European Council granted candidate country status to Macedonia, taking into account the "substantial progress made in completing the legislative framework related to the Ohrid Framework Agreement, as well as its track record in implementing the Stabilization and Association Agreement (including its trade-related provisions) since 2001." The Council also noted the need to consider further steps toward membership in light of the debate on the enlargement strategy, and the need for Macedonia to continue strong progress toward meeting the Copenhagen political criteria, as well as Stabilization and Association Agreement requirements.

Defense

Macedonia established its armed forces following independence and the complete withdrawal of the Yugoslav National Army (JNA) in March 1992. The Macedonian Armed Forces consist of an army, navy, air and air defense force, and a police force (under the Ministry of Interior). Under its North Atlantic Treaty Organization (NATO) Membership Action Plan, Macedonia has launched a major effort to reform and reconstruct its armed forces with the goal of building and sustaining a modern, professional defense force of about 12,000 troops.

Successive Macedonian governments have viewed integration into Euro-Atlantic political, economic, and security institutions as the country's primary foreign policy goal. In pursuit of these goals, Macedonia is restructuring its military to be smaller, more affordable, defensively oriented, and interoperable with NATO. The Macedonian Government has welcomed close cooperation with the U.S. military and seeks to deepen this relationship as it restructures its forces.

Macedonia continues to play an indispensable role as the Kosovo Force's (KFOR) rear area, hosting the logistical supply line for KFOR troops in Kosovo. As part of these efforts, Macedonia hosts NATO troops, including U.S. troops, in support of NATO operations in Kosovo and to assist Macedonia's efforts to reform its military to meet NATO standards. Close U.S.-Macedonian bilateral defense cooperation continues. Macedonia also contributes troops to international coalition operations in Iraq and Afghanistan, and recently deployed troops and equipment to support the EU peace support operation in Bosnia and Herzegovina.

Economy

Macedonia is a small economy with a gross domestic product (GDP) of about $6.2 billion, representing about 0.01% of the total world output. It also is an open economy, highly integrated into international trade, with a total trade-to-GDP ratio of 99.2%. Agriculture and industry have been the two most important sectors of the economy, but the services sector has gained prominence in the past few years. Economic problems persist, even as Macedonia undertakes structural reforms to finish the transition to a market-oriented economy. A largely obsolete industrial infrastructure has not seen much investment during the transition period. Labor force education and skills are competitive, but without adequate job opportunities, many with the best skills seek employment abroad. A low standard of living, high unemployment rate, and relatively modest economic growth rate are the central economic problems.

Five years of continuous economic expansion in Macedonia was interrupted by the 2001 conflict, which led to a contraction of 4.5% in 2001. Growth started to pick up in 2003 (2.8%) and continued in 2004 (4.1%), 2005 (3.8%), and 2006 (3.1%). Living standards still lag behind those enjoyed before independence. In 2007, real growth is projected to reach a rather optimistic 6% annually, with inflation of up to 3.2%. The United States is supporting Macedonia's transition to a democratic, secure, market-oriented society with substantial amounts of assistance.

Background

After the breakup of Yugoslavia in 1991, Macedonia, the former Yugoslavia's poorest republic, faced formidable economic challenges posed by both the transition to a market economy and a difficult regional situation. The breakup deprived Macedonia of key protected markets and large transfer payments from the central Yugoslav government. The war in Bosnia, international sanctions on Serbia, and the 1999 crisis in neighboring Kosovo delivered successive shocks to Macedonia's trade-dependent economy. The government's painful but necessary structural reforms and macroeconomic stabilization program generated additional economic dislocation. Macedonia’s economy was hurt especially by a trade embargo imposed by Greece in February 1994 in a dispute over the country's name, flag, and constitution, and by international trade sanctions against Serbia that were not suspended until a month after conclusion of the Dayton Accords. The impact of the 2001 ethnic Albanian insurgency in Macedonia, decreased international demand for Macedonian products, canceled contracts in the textile and iron and steel industry, and poor restructuring of the private sector affected Macedonia's growth and foreign trade prospects through 2004.

Macedonia's political and security situation is stable. This has allowed the government to refocus energies on domestic reforms, boosting economic growth, and attracting increased levels of foreign investment. In 2004, the government passed a progressive Trade Companies Law aimed at easing impediments to foreign investment, providing tax and investment incentives, and guaranteeing shareholder rights. In 2006, the government began implementing a one-stop procedure for business registration that considerably shortened the time required to register a new business. The government’s fiscal policy, aligned with International Monetary Fund (IMF) and World Bank policies, helped maintain a stable macroeconomic environment. Legislation that would further liberalize the telecommunications market, and completion of the first phase of privatization of the electricity sector, sent promising signals to investors. However, economic growth remained sub-par in 2005 and 2006, due in part to poor government results in combating corruption and a weak judiciary, as well as high domestic finance costs and continued bureaucratic obstacles to doing business. The new Government of Macedonia that took office in August 2006 put the fight against corruption and attracting foreign investors at the very top of its priority list. In 2007, it launched an expensive marketing campaign promoting the country as a good investment destination. It provided business incentives by cutting rates on profit tax and personal income tax, while implementing a “regulatory guillotine”--an activity which aims to significantly reduce procedures and legislative requirements for doing business.

Macroeconomy

The upward trend of real GDP continued in 2006 as well. After growing by 4.1% and 4% respectively in 2004 and 2005, it grew by 3.1% in 2006. The growth was broad-based as value added increased in all sectors, except in health and social protection. Mining and quarrying led the growth with a 26.8% annual increase, capitalizing on favorable world prices for various metals. Services grew by 3.6% on average, and trade was higher by 5%. Industrial output in 2006 was 3.6% higher than in 2005. The annualized consumer price index (CPI) rose by 3.2%. The official unemployment rate came down a bit to 36.0% in 2006. A conservative and poorly structured fiscal policy has kept the budget in a negligible budget deficit of 0.2% of GDP, well below the revised 0.8% annual target. In such circumstances, monetary policy provided for credit to households and enterprises to expand by 30.5% in 2006, and interest rates have continued to come down. Although export growth topped import growth by one percentage point in 2006, the trade deficit remained high at 21.9% of GDP. In spite of that, the current account deficit was only 0.4% of GDP, primarily due to large private transfers inflow. External debt remained stable at 39.3% of GDP.

In late 2005, Macedonian authorities concluded a new Stand-By Arrangement (SBA) with the IMF and a Programmatic Development Policy Loan (PDPL) with the World Bank. In 2006 both financial institutions positively assessed their first review of enforcement of the programs, which resulted in the Macedonian Government withdrawing $12 million from the IMF and $30 million from the World Bank. Since that, the SBA has turned to be only precautionary as balance-of-payment support is not needed anymore. In March 2007, the World Bank Board approved the PDPL 2 arrangement, allowing the Government of Macedonia to withdraw another tranche worth $30 million. In late April 2007, the IMF Board approved the second positive review of the SBA.

Trade

Macedonia remains committed to pursuing membership in the European Union and global economic structures. It became a full World Trade Organization (WTO) member in April 2003. Following a 1997 cooperation agreement with the European Union (EU), Macedonia signed a Stabilization and Association Agreement with the EU in April 2001, giving Macedonia duty-free access to European markets. In December 2005, it moved a step forward, obtaining candidate country status for EU accession. Macedonia has had a foreign trade deficit since 1994, which reached a record high of $1.362 billion in 2006, or 21.9% of GDP. Total 2006 trade (imports plus exports of goods and services) was $6.163 billion, or 99.2% of GDP. Macedonia's major trading partners are Serbia, Montenegro, Germany, and Greece. In 2006, total trade between Macedonia and the United States was $63.4 million. U.S. exports accounted for 1.1% of Macedonia's total imports. U.S. meat, mainly poultry, and electrical machinery have been particularly attractive to Macedonian importers. Principal Macedonian exports to the United States are tobacco, apparel, footwear, and iron and steel.

Macedonia has Free Trade Agreements with Ukraine, Turkey, and the European Free Trade Association countries. Bilateral agreements with Albania, Bosnia and Herzegovina, Croatia, Serbia, Montenegro, UN Mission in Kosovo, and Moldova were replaced with the membership in the Central European Free Trade Agreement (CEFTA), which the other countries joined in December 2006.

History

Throughout its history, the present-day territory of Macedonia has been a crossroads for both traders and conquerors moving between the European continent and Asia Minor. Each of these transiting powers left its mark upon the region, giving rise to a rich and varied cultural and historical tradition.

After the fall of the Western Roman Empire, the territory of Macedonia fell under the control of the Byzantine Empire in the 6th and 7th centuries. It was during this period that large groups of Slavic people migrated to the Balkan region. The Ottoman Turks conquered the territory in the 15th century; it remained under Ottoman Turkish rule until 1912.

After more than four centuries of rule, Ottoman power in the region began to wane, and by the middle of the 19th century, Greece, Bulgaria, and Serbia were competing for influence in the territory. During this time, a nationalist movement emerged and grew in Macedonia. The latter half of the 19th century, and continuing into the early part of the 20th century, was marked by sporadic nationalist uprisings, culminating in the Ilinden Uprising of August 2, 1903. Macedonian revolutionaries liberated the town of Krushevo and established the short-lived Republic of Krushevo, which was put down by Ottoman forces after 10 days. Following Ottoman Turkey's defeat by the allied Balkan countries--Bulgaria, Serbia, Montenegro, and Greece--during the First Balkan War in autumn 1912, the same allies fought the Second Balkan War over the division of Macedonia. The August 1913 Treaty of Bucharest ended this conflict by dividing the territory between Bulgaria, Greece, and Serbia. The 1919 Treaty of Versailles sanctioned partitioning Macedonia between The Kingdom of Serbs, Croats and Slovenes, Bulgaria, and Greece. In the wake of the First World War, Vardar Macedonia (the present day area of the Republic of Macedonia) was incorporated into the newly formed Kingdom of Serbs, Croats, and Slovenes.

Throughout much of the Second World War, Bulgaria and Italy occupied Macedonia. Many people joined partisan movements during this time and succeeded in liberating the region in late 1944. Following the war, Macedonia became one of the constituent republics of the new Socialist Federal Republic of Yugoslavia under Marshall Tito. During this period, Macedonian culture and language flourished.

As communism fell throughout Eastern Europe in the late 20th century, Macedonia followed its other federation partners and declared its independence from Yugoslavia in late 1991. Macedonia was the only republic of the former Yugoslavia whose secession in 1991 was not clouded by ethnic or other armed conflict, although the ethnic Albanian population declined to participate in the referendum on independence. The new Macedonian constitution took effect November 20, 1991 and called for a system of government based on a parliamentary democracy. The first democratically elected coalition government was led by Prime Minister Branko Crvenkovski of the Social Democratic Union of Macedonia (SDSM) and included the ethnic Albanian Party for Democratic Prosperity (PDP). Kiro Gligorov became the first President of an independent Macedonia.

President Gligorov was the first president of a former Yugoslav republic to relinquish office. In accordance with the terms of the Macedonian constitution, his presidency ended in November 1999 after 8 years in office, which included surviving a car bombing assassination attempt in 1995. He was succeeded by former Deputy Foreign Minister Boris Trajkovski (VMRO-DPMNE), who defeated Tito Petkovski (SDSM) in a second-round run-off election for the presidency on November 14, 1999. Trajkovski's election was confirmed by a December 5, 1999 partial re-vote in 230 polling stations, which the Macedonian Supreme Court mandated due to election irregularities.

In November 1998 parliamentary elections, the SDSM lost its majority. A new coalition government emerged under the leadership of Prime Minister Ljubco Georgievski of the Internal Macedonian Revolutionary Organization-Democratic Party for Macedonian National Unity (VMRO-DPMNE). The initial coalition included the ethnic Albanian Democratic Party of Albanians (DPA).

During the Yugoslav period, Macedonian ethnic identity was evident in that most of Macedonia's Slavic population identified themselves as Macedonians, while several minority groups, in particular ethnic Albanians, retained their own distinct political culture and language. Although interethnic tensions simmered under Yugoslav authority and during the first decade of its independence, the country avoided ethnically motivated conflict until several years after independence. Ethnic minority grievances, which had erupted on occasion (1995 and 1997), rapidly began to gain political currency in late 2000, leading many in the ethnic Albanian community in Macedonia to question their minority protection under, and participation in, the government. Tensions erupted into open hostilities in Macedonia in February 2001, when a group of ethnic Albanians near the Kosovo border carried out armed provocations that soon escalated into an insurgency. Purporting to fight for greater civil rights for ethnic Albanians in Macedonia, the group seized territory and launched attacks against government forces. Many observers ascribed other motives to the so-called National Liberation Army (NLA), including support for criminality and the assertion of political control over affected areas. The insurgency spread through northern and western Macedonia during the first half of 2001. Under international mediation, a cease-fire was brokered in July 2001, and the government coalition was expanded in July 2001 to form a grand coalition which included the major opposition parties.

The expanded coalition of ruling ethnic Macedonian and ethnic Albanian political leaders, with facilitation by U.S. and European Union (EU) diplomats, negotiated and then signed the Ohrid Framework Agreement in August 2001, which brought an end to the fighting. The agreement called for implementation of constitutional and legislative changes, which lay the foundation for improved civil rights for minority groups. The Macedonian parliament adopted the constitutional changes outlined in the accord in November 2001. The grand coalition disbanded following the signing of the Ohrid Framework Agreement and the passage of new constitutional amendments. A coalition led by Prime Minister Georgievski, including DPA and several smaller parties, completed its parliamentary term.

In September 2002 elections, an SDSM-led pre-election coalition won half of the 120 seats in parliament. Branko Crvenkovski was elected Prime Minister in coalition with the ethnic Albanian Democratic Union for Integration (DUI) party and the Liberal-Democratic Party (LDP).

On February 26, 2004 President Trajkovski died in a plane crash in Bosnia. Presidential elections were held April 14 and 28, 2004. Then-Prime Minister Branko Crvenkovski won the second round and was inaugurated President on May 12, 2004. The parliament confirmed Hari Kostov, former Interior Minister, as Prime Minister June 2, 2004. Prime Minister Kostov resigned November 15, 2004. On December 17, 2004, former Defense Minister Vlado Buckovski was confirmed by parliament as Prime Minister, maintaining the coalition with the ethnic Albanian Democratic Union for Integration (DUI) and the Liberal-Democratic (LDP) parties.

With international assistance, the SDSM-DUI-LDP governing coalition completed the legislative implementation of the Ohrid Framework Agreement, which is a precondition for Macedonia’s integration into Euro-Atlantic institutions. A November 7, 2004 referendum opposing completion of this process failed, freeing the way for the government to complete Framework Agreement implementation.

Local elections were held in March-April 2005 under a new territorial reorganization plan that consolidated the overall number of Macedonia’s municipalities and created a number of ethnically-mixed municipalities in which ethnic Albanian populations were dominant. The process of decentralization began in the new municipalities in July 2005 and is continuing.

The July 2006 parliamentary elections resulted in a VMRO-DPMNE-led government assuming power, in coalition with DPA, NSDP, and several smaller parties. The new government, which was confirmed in office by a parliamentary vote on August 26, 2006, stated its commitment to completing Framework Agreement implementation and reaffirmed its commitment to pursuing NATO and EU membership.